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The ayatollah’s organization would go on to acquire stakes in a major bank by 2007 and in Iran’s largest telecommunications company in 2009. Among dozens of other investments, it took over a giant holding company in 2010.

Seven years ago, the United Nations and Western powers began subjecting Tehran to steadily harsher economic sanctions. Around the same time, an organization controlled by Supreme Leader Ayatollah Ali Khamenei started to study how some developing economies managed to grow fast.

According to an account this year by a senior official in the unit that oversees Setad’s financial investments, Ali Ashraf Afkhami, the organization also picked the perfect candidate to create an Iranian national champion: Setad itself.

The ayatollah’s organization would go on to acquire stakes in a major bank by 2007 and in Iran’s largest telecommunications company in 2009. Among dozens of other investments, it took over a giant holding company in 2010.

An organizational chart labeled “SETAD at a Glance,” prepared in 2010 by one of Setad’s companies and seen by Reuters, illustrates how big it had grown. The document shows holdings in major banks, a brokerage, an insurance company, power plants, energy and construction firms, a refinery, a cement company and soft drinks manufacturing.

Today, Setad’s vast operations provide an independent source of revenue and patronage for Supreme Leader Khamenei, even as the West squeezes the Iranian economy harder with sanctions in an attempt to end the nuclear-development program he controls.

“He has a huge sum at his disposal that he can spend,” says Mohsen Sazegara, a co-founder of the powerful Islamic Revolutionary Guard Corps military force, who is now living in exile in the United States. “When you have this much money, that’s power itself.”

Even as Setad was gaining ever-greater control over the Iranian economy in recent years, the Western powers knew of the organization and its connection to the supreme leader — the one man with the power to halt Tehran’s uranium-enrichment program. But they moved cautiously, and Setad largely escaped foreign pressure.

In July 2010, the European Union included Mohammad Mokhber, president of Setad, in a list of individuals and entities it was sanctioning for alleged involvement in “nuclear or ballistic missiles activities.” Two years later, it removed him from the list.

In June, the US Treasury Department added Setad and 37 companies it “oversees” to its list of sanctioned entities. Khamenei wasn’t named in the announcement, but a Treasury official later told a Senate committee that Setad is controlled by the supreme leader’s office.

Asked why Khamenei himself wasn’t targeted, US officials told Reuters they did not want to play into the hands of Iranian officials who maintain that Washington’s ultimate goal in pressuring Iran with sanctions is to topple the government.

“Regime change is not our policy,” said one US official. “But putting pressure on this regime certainly is.”

By the time Setad felt the pressure, it was already a giant. Setad was founded with modest ambitions. Its genesis was a two-paragraph order issued in 1989 by Khamenei’s predecessor, Ayatollah Ruhollah Khomeini, shortly before he died. The order directed two aides to sell and manage properties that had supposedly been abandoned during the chaotic years following the 1979 Islamic Revolution, and channel much of the proceeds to charity. The edict ultimately sparked a new organization whose full name in Persian is “Setad Ejraiye Farmane Hazrate Emam” — the Headquarters for Executing the Order of the Imam.

According to one of its co-founders, Setad was meant to last two years. But under Khamenei’s control, it remained in business, amassing a giant portfolio of real estate by claiming in Iranian courts, sometimes falsely, that the properties were abandoned. In fact, many were seized from members of minorities, and business people and other Iranians living abroad. Since 2000 it has moved into almost every area of the economy.

In an interview, David Cohen, the Treasury Department’s Under Secretary for Terrorism and Financial Intelligence, said Setad now generates “billions of dollars a year” in revenue. He added, “the supreme leader’s own money is handled and invested in” a Setad division known as the Tadbir Economic Development Group, although he said the amount isn’t known. A Treasury Department spokesman said Tadbir also manages investments for “other leadership figures” in Iran, but didn’t name them.

The Iranian president’s office, the Foreign Ministry and Tadbir Economic Development Group didn’t respond to requests for comment. Iran’s embassy in the United Arab Emirates issued a statement calling Reuters’ findings “scattered and disparate” and said that “none has any basis.” It didn’t elaborate.

Setad’s director general of public relations, Hamid Vaezi, said in an e-mail that the Reuters series is “far from realities and is not correct” but didn’t go into specifics. In a subsequent message, he said Setad disputes the Treasury allegations and is in the process of hiring US legal counsel to challenge the sanctions.

Setad’s total net worth is difficult to pinpoint due to the secrecy of its accounts and because its stakes in companies frequently change. But Reuters was able to identify holdings of real estate, corporate investments and other assets in Setad’s control worth about $95 billion. That estimate is based on statements by Setad officials, data from the Tehran Stock Exchange and company websites, and information from the Treasury Department.

About $52 billion of that sum is in property. The head of Setad’s real-estate division said the property unit was worth that amount at a press conference in 2008. It is possible that this figure has risen or fallen since then as the portfolio has evolved.

Setad also has an estimated $43 billion or more in corporate holdings, Reuters found:

The US Treasury Department assessed Rey Investment Co, controlled by Setad, as worth about $40 billion in 2010, the year Setad took control of it. (The Treasury did not put an overall value on Setad).

Through a subsidiary, Setad bought a 19 percent stake in Telecommunication Co of Iran, the country’s largest telecom provider, for about $3 billion.

Reuters also identified at least 24 publicly traded companies not named in the recent Treasury sanctions in which Setad, or a company it invested in, held a minority stake. At the current official exchange rate, those investments are worth more than $400 million, according to valuations from the Tehran Stock Exchange and data gleaned from the exchange and company websites.

Reuters further identified 14 companies Setad has investments in — often through other businesses — that couldn’t be valued because they are not publicly traded.

The Revolutionary Guards, the powerful military unit tasked with protecting Iran from both domestic and foreign threats, has long held a pivotal role in the country’s economy, with extensive holdings in defense, construction and oil industries, according to the US State Department.

Setad gives the supreme leader a significant financial resource of his own, one that greatly adds to his power. Khamenei appoints Setad’s board of directors but delegates management of the organization to others, according to one former employee. This person said the supreme leader is primarily concerned about one thing: its annual profits, which he uses to fund his bureaucracy. “All he cares about is the number,” this person said.

“It’s Like A Tsunami”

Details of how Setad has acquired so many stakes in public and private businesses are hazy. People familiar with the organization say it has bought shares on the open market and pressured investors to sell it shares. In at least one case, shares Setad now controls were confiscated from their original owner.

Shirin Reghabi, a teacher now living in California, told Reuters she was a major shareholder in Fars & Khuzestan Cement Co, which states on its website it is Iran’s largest cement firm. The shares, which she had purchased several years before the 1979 revolution, were seized more than 20 years ago, she said.

Her husband, attorney Ross K. Reghabi, said when he looked into the matter a few years ago, he learned that the shares had been confiscated by a foundation called Bonyad Mostazafan, but then transferred to another company that was connected to Setad. He estimates the shares are now worth close to $100 million. “It’s like a tsunami now. They are in control of all these companies,” he said.

The Reghabis concluded they had no recourse against the ayatollah’s organization. “I gave up,” Mrs. Reghabi said.

In 2000, Setad took one of its earliest steps to formalize its move beyond property, setting up an investment management firm called Tadbir Investment Co. It would eventually become one of at least five main vehicles through which Setad holds corporate stakes.

Mahmoud Ahmadinejad, a hard-line conservative, was elected Iran’s president in 2005, replacing a more moderate leader. Iran holds regular presidential and parliamentary elections, though the real power remains with the supreme leader. Two months later, Tehran announced it had resumed uranium conversion as part of a nuclear program. The West believes Iran wants to build atomic weapons. Iran has long said the program is for peaceful energy development — a position Tehran reiterated in recent days when it and Western powers held marathon talks aimed at a possible rapprochement. Those talks failed to reach a deal; negotiations will resume soon. In December 2006, the United Nations Security Council imposed sanctions on Iran’s trade in nuclear-related materials and technology, and froze assets of key individuals and companies involved in the nuclear program.

A Special Bank

Meanwhile, Setad was making a push into banking. Parsian Bank had opened for business in 2002, and it was different from other Iranian lenders. It offered interest rates that were slightly higher than government-run banks.

But while other financial institutions typically capped the size of their mortgage loans, Parsian was willing to finance 80 percent of a property’s value, making financing a real option for many new homebuyers. “People could actually buy houses,” said one former employee who requested anonymity.

Parsian was particularly unusual in another aspect: It had a lenient dress code. Men wore ties and women used makeup, which Iran’s religious conservatives criticize for contributing to the spread of Western culture.

“People liked to come in the bank just to watch the people working there,” said the ex-employee, who added that in its hiring practices, Parsian “was very much valuing people based on brain and intellectual capacity, not based on their connections.”

By 2006, Parsian had opened more than 100 branches and become Iran’s largest non-state bank. But the institution faced trouble. According to people familiar with the matter, in 2005, Mohammad Shariatmadari, who had served on Setad’s board of directors, asked Parsian’s managing director, Abdollah Talebi, for a $44 million loan for a foundation he managed.

Shariatmadari offered no collateral for the loan; Talebi refused. Meanwhile, President Ahmadinejad publicly criticized the lending practices of private banks, accusing them of making huge loans to favored clients. News media reported that he had Parsian Bank in his sights. Under pressure, Talebi resigned as managing director in 2006 and later quit the bank’s board after Iran’s Central Bank disqualified him for allegedly violating its rules on loans.

Neither Talebi nor Shariatmadari responded to requests for comment. It was during this period that Setad’s investment firm, Tadbir Investment Co, acquired a stake in Parsian. Although the stake was small — a Setad official later suggested it was 16 percent — the former employee likened Tadbir’s arrival to “a hostile takeover.” The atmosphere at Parsian changed dramatically, according to the ex-employee. Ties were banned for men.

Female employees began receiving letters asking, “Why are you wearing jeans— Why are your lips red.” New managers arrived. “Even the customers of the bank changed,” the ex-employee said. “They brought their own customers and clients.” The bank’s board also changed. According to Parsian’s website, its members now include Aref Norozi, who it also says serves on the board of Tadbir Investment. Norozi was also head of Setad’s enormous real-estate division, which sells and manages confiscated properties. It was Norozi who in 2008 put the value of Setad’s real-estate holdings at about $52 billion.